If consumption is $25 000 when income is $21 000, and consumption increases to $25 900 when income increases to $22 000, the MPC is:

Question

Quizplus · Accepted Answer

The Marginal Propensity to Consume (MPC) is calculated as the change in consumption divided by the change in income. Here, the change in consumption is $25,900 - $25,000 = $900, and the change in income is $22,000 - $21,000 = $1,000. Therefore, MPC = $900 / $1,000 = 0.90.

If Consumption Is $25 000 When Income Is $21 000